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Many from 'top 20' cities need to upgrade proposals to get funds

Fri, 29th Jan 2016 (Source:Business Standard)

The Union government on Thursday announced the top 20 list for the smart city project, but many of these cities would need to upgrade their proposals to qualify for the first round of Central funds. Replying to a question at a press conference, urban development secretary Madhusudhan Prasad said Rs 200 crore for each selected city would be given out this financial year — a total outgo of Rs 4,000 crore. This is to be followed by Rs 100 crore each in the subsequent three years as part of the plan to spend Rs 50,000 crore on 100 smart cities in a phased manner. However, he pointed out some of the selected cities have to upgrade their proposals before the Centre disburses its funds in FY16.

It is learnt that around 10 cities in the top 20 list have been told to upgrade their proposals to match the yardsticks of smart cities. Till that is done, the promised first tranche of Rs 200 crore each would not come, an official said. Also, while the announcement of the 20 names implies that the National Democratic Alliance (NDA) government’s signature smart city project has actually been kicked off, there’s no deadline given.

While announcing Bhubaneshwar (Odisha) as the top name, urban development minister Venkaiah Naidu said the winner was a surprise candidate. The 20 selected cities have come from 11 states, with Bharatiya Janata Party (BJP)-ruled Madhya Pradesh getting the highest share of three (Bhopal, Indore and Jabalpur) in the first list. Those with two cities each include Gujarat, Rajasthan, Maharashtra (all BJP-ruled) and Andhra Pradesh (led by BJP ally Telugu Desam Party).

All India Anna Dravida Munnetra Kazhagam-ruled Tamil Nadu and Congress-ruled Karnataka have also made it to the list with two cities each. Punjab, Assam, Kerala and New Delhi Municipal Council area of Delhi are the other winners.

When asked why Varanasi, the constituency of Prime Minister Narendra Modi, is not part of the top 20 list, Naidu said, “The local municipality should know the answer.” Last year, Japan had signed a memorandum of understanding to partner Varanasi as a smart city. In the pecking order released on Thursday, Varanasi is 96th on the list.

While West Bengal, Uttar Pradesh (going to polls in 2016 and 2017, respectively) and Bihar have not found any representation in the smart city list, 23 states/Union territories have been given a chance to fast-track their plans by April 15.

Arindam Guha, senior director at Deloitte India, said, “There are no winners or losers here. The really smart cities will build on the effort already put into developing the Smart City plans and take some of the implementation forward, especially those which do not require significant financial outlays like increasing walkability by improving pavements or are largely supported by private investment like Wi-Fi facilities in public spaces, beautification of public places through corporate sponsorships or advertisements.”

Funding of smart city project is seen as the most critical. The Centre’s funds have to be matched by money from states and municipalities. The spend on retrofitting and redevelopment projects will be on areas such as intelligent solutions for transport; the management of water, energy, solid waste; e-governance; smart health and education services; CCTV surveillance, etc. Around 10 cities alone have proposed resources of Rs 8,521 crore from public private partnerships (PPPs) and another Rs 4,539 crore from convergence of different schemes, Naidu said at the conference. For instance, Bhubaneswar has proposed to raise Rs 525 crore from convergence of schemes and Rs 2,563 crore from PPP; Pune Rs 700 crore from convergence; Surat Rs 365 crore from convergence and Rs 795 crore from PPP; and NDMC Rs 797 crore from PPP.

Jaijit Bhattacharya, partner, infrastructure and government services at KPMG India, said: “KPMG worked with NDMC to come out with one of the most innovative proposals. We are confident that today's announcement will further accelerate the transformation of cities into smart cities and will witness very significant investments coming in.” According to Sanjay Dutt, managing director, India, Cushman & Wakefield, the project would require huge fund mobilisation that could be brought about by PPPs for developing smart cities. “Incentivising infrastructure development would lead to higher private participation in the formation of smart cities.’’

A few months ago, the Cabinet had cleared Rs 50,000 crore for the project and another Rs 48,000 crore for AMRUT (another city rejuvenation plan) — both schemes were part of the election plank of NDA last year.

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